A savings account is a bank account that is beneficial for salaried people with regular monthly incomes. A savings account is insured up to Rs. 1 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC), Ministry of Finance. Apart from a bank, you can also open a savings account under the Post Office. A savings account of a Post Office attracts better interest rates than bank savings accounts. Sometimes, all the banks do not have their branches in remote areas of the country, but Post Office has better reach to remote areas.
The basic difference between a current account and a savings account is that the latter will offer you interest on the deposits. The reason behind a savings account offers such a low level of interest is because your money will be kept there safely unless it is withdrawn or paid out. Savings accounts offer interest rates that can range from 2.70% PA to 5.25% PA, depending on the net balance amount and it will vary upon the bank and the Post Office.
Interest rates chart of few top banks
|Bank||Interest Rate (PA)|
|Punjab National Bank (PNB)||3.00%|
|Bank Of India||2.90%|
|Kotak Mahindra Bank||3.50%|
Compared to these rates, the Post office savings account offers 4% PA. Hence, the interest rate on a savings account is better than other public or private banks. So, if you want to open a savings accounts, you can check the offers provided by the Post Office. The account will fetch you the same benefits, but with a better interest rate. Only a minimum balance of Rs. 500 will be required for opening the account.
Savings accounts types
Savings accounts can be of many types like Regular Savings Account, Salary-based Savings Account, Senior Citizens Savings Accounts, Minors' Savings Accounts, Zero Balance Savings Account, Women's Savings Account. In the present time, the net banking option of the savings accounts is an additional benefit, you do not need to visit the bank physically to open the account or operate transactions. The minimum maintenance balance for a savings account is lower than current accounts. You can directly pay your credit card bills or transfer funds from your savings account.
A savings account also helps to keep track of the account holder's income tax returns. The liquidity of a savings account is very easy but the withdrawal limits depend; a customer will be able to withdraw the money up to a particular limit, in a month. Additionally, some banks can also offer discounts on purchases through their savings accounts like credit cardholders.